Board Member Gives
Report on Restaurant Matter
The following is a report that will be presented to the Sun City Anthem Board meeting by Nona Tobin.
It is LENGTHY;
however, in order to avoid any form of misunderstanding, rather than using a
summary, we are printing the entire presentation for your
review.
Keep in mind these are merely her thoughts, not
necessarily those of others, and in our opinion, seem quite biased in favor of
yet another restaurant, despite the continual failures of the
past.
Ms. Tobin is NOT AN
ATTORNEY and as a result, we would hope any such thoughts be examined by
AN INDEPENDENT LEGAL SOURCE, in addition to our
association attorney, in order to avoid bias toward adopting any
option.
At the conclusion of Ms. Tobin's presentation, we
have two suggestions.
First, send your thoughts to the Sun City Anthem
Board members, and then send us your opinion of Nona Tobin's
report.
Special thanks goes to Rana
Goodman of Anthem Today for calling this to
our attention.
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Restaurant Space Study
Nona Tobin’s
Recommendations for
Board Direction to the GM at the May 25, 2017 BOD Meeting
Board Direction to the GM at the May 25, 2017 BOD Meeting
Summary:
Time is of the essence as the restaurant has been closed 16 months, and the cost while it is closed is $4,000+/month, excluding the cost of reserving for idle equipment.
It is contrary to our CC&Rs to discontinue operation of the
restaurant without 75% of the Owners written approval.
The board’s role is to set policy direction and identify priorities to
ensure that the Association is in legal compliance and acting solely in the best
interests of the Association and its members.
The GM manages operations within Board-defined parameters.
The Board needs to revise and be more specific in its direction to the
GM to return SCA to compliance with our CC&Rs and to get the job
done, i.e., a restaurant that meets owners’ needs is expeditiously put back
in operation using on an open,fully disclosed analysis of the
options.
Although the specificity of instruction to a GM is not normally needed or appropriate, it is necessary in this case because 1) the job is not done, 2) SCA is not in legal compliance, and 3) the current method being employed by the Board and GM offers no promise of relief.
It is my recommendation that the Board vote each of my recommendations
up, down or to modify individually, rather than reject or table this entire
report for whatever reason.
The GM cannot do her job if this Board does not do its job.
Recommendations
1. Resolve that time is of the essence to return the restaurant to operation to bring SCA back into compliance our CC&Rs provision 7.2(b).1.
2. Resolve that the SCA Board is prohibited by statute (NRS 116.3103(2)(a) from changing the CC&Rs or exempting the Association, the Board or the members from any of the provisions of the CC&Rs.2.
3. For discussion and possible action at the June 25 meeting, direct the GM to locate an independent commercial agent/ real estate broker/agent/with expertise in bars, restaurants, gaming and the local market to potentially negotiate a lease, utilizing the recommendations and expertise of residents to assist her in her search.
4. If the GM needs outside expertise to
complete the analysis and report by June 9 for the June 22 Board meeting,
authorize the expenditure of up to $2,000 for this purpose.
This does not have to be the same specialized agent who will be needed to eventually negotiate a lease.
5. Board approval is requested to specify
that at least the following options must be reported for the Board’s
consideration at the June 25 Board meeting.
The GM can include other options in the analysis.
The final pages of this document contain
information I gleaned from a review of SCA records and Owner
input.
a. Option 1
Lease space to a tenant for $1 rent
b. Option 2
Restaurant Subsidized by Gaming using a licensed route operator or a
licensed tenant.
c. Option 3
Restaurant using a required food and beverage minimum.
d. Option 4
Non-profit Culinary School operated by a newly chartered SCA Culinary
Club.
e. Option 5
Re-purpose the space into multi-purpose and activity
rooms
6. Direct the GM to complete by June 9, 2017
for Board review, and publish on June 16 in the Board Book, the analysis of the
selected options, including pros, cons, costs and recommendations, including
benchmark comparisons with the local comparables, The Willows at Sun City
MacDonald Ranch and three restaurants owned by Sun City Summerlin: 5 Star
Tavern, Tavern at the Falls, and The Summit.
7. Board should specify the high-level
parameters to be mandatory in any lease.
8. Direct GM to recommend RFP parameters for potential tenants using the suggestions below which came from input from residents and the historical record of SCA, and ways to ensure an open, fair selection process.
Regardless of whether the suggestions below are used or changed, the GM
is directed to report costs and justify how her recommendations benefit members.
Restaurant features suggested by members
include:
a. Reasonably priced food and drinks especially with discounted prices during daily Happy Hour.
b. Menu items like common café/tavern fare with variety to accommodate taste for ethnic diversity, eg., burritos, chicken teriyaki, lasagna, etc.
c. Food or bar service during hours when the most people are there for other activities.
d. 8 hours per day, six days/ week.
e. Offer take out menu.
f. Compete for the catering to SCA Clubs; staging area for other caterers.
g. No outside catering jobs.
h. Tenant is responsible for maintaining and replacing the equipment.
i. Tenant is responsible for utilities.
Background
The last of five failed restaurants closed in January, 2016, two months after the GM was hired, but a year before the cut over to self-management from First Service Residential (FSR) was scheduled to occur.
The Board did not give the GM policy direction to make reopening
the restaurant a top priority and priority was given to myriad tasks required to transition accounting and operational systems from FSR’s proprietary system.
the restaurant a top priority and priority was given to myriad tasks required to transition accounting and operational systems from FSR’s proprietary system.
Further, FSR’s lack of cooperation, opaque records and failure to
perform required maintenance demanded that the GM’s attention be focused on
deferred maintenance of facilities and systems changes.
7/28/16
GM reported to the Board that:
A workshop has been scheduled for Tuesday, September 27, 2016 at 9 am in the Delaware room.
This workshop is an opportunity for residents to share feedback to
Management and the Board regarding the restaurant space.
The Board has instructed me that securing a restaurant is a management
task.
I think we can all agree that a restaurant is
needed; it’s just a matter of what kind and how we go about it.
To that end, we hope that this scheduled workshop is productive and meaningful.
To that end, we hope that this scheduled workshop is productive and meaningful.
There is no specific timeline or process that has been outlined yet
related to the restaurant. This is just the beginning.
9/27/16
Workshop for resident input was held, but there is
no audio recording, no minutes, or even the fact that the meeting occurred
listed on the SCA website.
The GM has not articulated how Owners benefit or
why it is a better business decision to structure the study to evade giving
Owners their rights as mandated by NRS 116.31083.
11/16/16
The GM was directed during her appraisal that a performance expectation
was that she was to “Present the Board with alternatives/resolutions for the
restaurant space by the end of the fiscal year (12/31/17).
2/23/17
The GM offered three alternatives, recommending two and against a
self-managed alternative and requested Board direction:
• Self-managed restaurant with monopoly on catering, unacceptable levels of liability and increases in accounting, auditing and insurance costs (Employees were not mentioned.)
• Tenant-operated Restaurant- leased for $1/year, requiring $14+/year direct subsidy from dues for utilities estimated at $100-120K/yr.; monopoly on catering, vendor/public would compete for the ballroom and lessen access for club and association events; close coffee bar.
• Repurpose space – Inaccurately stated that CC&Rs 7.2b requires written consent of the majority of the members to re-purpose; planned use “multi-purpose & activity”rooms.
Conclusion
“Does the board have any direction to the General Manager related
to
Tenant leases space and repurpose space?”
Tenant leases space and repurpose space?”
3/23/17
Board ratified recommendation to eliminate self-managed option;
notified Owners there would be more workshops for their input.
5/9/17
Restaurant Space Workshop collected Owner input,
but was no agenda, no audio recording and no minutes.
5/9/17
Tom Nissen presented this status report of actions taken between
2/23/17 update report and 5/9/17 update report:
• A draft P&L was developed (P&L was not
shared nor was how he has the expertise.)
• Advice was received from potential tenants who self-initiated contact
with SCA (This creates a conflict as it biases the
process.)
• $1 rent (as example) to prove that subsidy is the only way a restaurant could succeed.
• SCA should prop up the operator at an estimated
annual cost of $100K-$125K to ensure the tenants’ success.
(Is this expenditure even permissible by our
CC&Rs?).
• More financial work needed (The reason for it is not explained)
• 1120H tax issues
• Get new attorney’s opinion needed about re-purpose
• Let new Board weigh in Impact of restaurant not being in operation.
Owners are deprived of an expected service.
This amenity was created by the Declarant Del Webb
and was intended to be in continuous operation unless 75% agree in writing to
discontinue the operation.
Waste of money.
It costs $4,000/month, excluding the cost for reserving for the idle
equipment, for every month.
The impact on the Reserves is anecdotally a similar amount, but
this cost needs to be articulated in the report.
this cost needs to be articulated in the report.
Restaurant staying closed put SCA in violation of CC&Rs.
Significant conflicting priorities and inadequate direction from the
Board delayed the GM’s work on the project.
Residents have not had a restaurant for 16 months already and there is no end in sight.
That the SCA Board has tolerated and even exacerbated SCA being in
violation of CC&R 7.2(b) is unacceptable and must be
corrected.
No plan.
There is no articulated plan with milestones and deadlines to get the
job done.
Failing to plan is planning to fail.
Role confusion is exacerbated and is destructive to self-management being successful in SCA.
The GM reported that “The Board has instructed me that securing a restaurant is a
management task.” Over-delegation of the Board’s policy function to the
GM will cause failure of self-management.
Option 1
Food and bar service with direct subsidy from the dues.
In both the GM’s and Tom Nissen status reports the necessity of a subsidy was emphasized.
Renting to a tenant for $1 was an example which would result in a
subsidy from the Owners assessments of about $14-18/year per Lot.
(How this estimate was built needs to be publicly
disclosed.)
Many Owners have repeatedly stated they want to see some form of reasonably priced food and bar service that is open during the hours that most people are visiting the Anthem Center for other activities, but are opposed to direct subsidy from the dues.
The GM should articulate in writing why she is recommending that the Board adopt the policy that SCA owners should take responsibility for propping up a vendor who would otherwise fail because the food is not at the right price point nor of good quality.
Option 2
Gaming to subsidize restaurant by leasing to a licensed tenant or a licensed route operator.
The Board needs to get a specialized agent/broker's advice, but previous Boards have concluded based on their analysis that gaming under the license of a route operator or the tenant’s existing license can be profitable.
Since the Association cannot receive a cut of the gaming profits (per
Gaming Control Board), SCA could benefit by more favorable lease terms with a
tenant whose profit came partially from gaming.
Presumably, the tenant would not need to cut corners on the quality of
the food or raise menu prices if the majority of their income came from gaming.
The goal would be to negotiate a lease favorable enough to avoid
a
subsidy from dues.
subsidy from dues.
Information from several former Board members shows that renovating the space for gaming was explored earlier.
About $100K was a contractor's estimate (around 2009) for
a
newly-constructed bar and the necessary removal of a non-load-bearing wall.
newly-constructed bar and the necessary removal of a non-load-bearing wall.
One current estimate for a reconfigured space would have an L-shaped
bar that could accommodate up to 15 machines at a cost of $170,000 whereas a
U-shaped bar is estimated to cost around $250,000.
Using a route operator or a licensed tenant would render moot
identified potential problems and costs of insurance and licensing which could
exist if the Association were the operator.
If a commercial broker with expertise in the local market, gaming, restaurants and bars couldn't get a route operator to come in because it wasn't worth it financially, or if we could get a more favorable lease with a better but a different tenant who was not licensed for gaming, then gaming could be dropped if unneeded, unwanted, or not worth the trouble.
If a commercial broker with expertise in the local market, gaming, restaurants and bars couldn't get a route operator to come in because it wasn't worth it financially, or if we could get a more favorable lease with a better but a different tenant who was not licensed for gaming, then gaming could be dropped if unneeded, unwanted, or not worth the trouble.
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Now...it's your
turn.
Have a comment ?
We suggest you send your thoughts
directly to members of the Sun City Anthem Board.
Here is a link to their respective
email addresses:
...and send any personal thoughts to us
at:
Dick, part of what we are paying for the restaurant location is approximately $14,000 in real estate taxes for retail space. It may even be higher as that number was from 2 years ago.
Maybe the people that want the restaurant, would agree to pay to subsidize it, and receive a 10% discount from the menu price.
Residents that choose not to subsidize the restaurant pay the full menu price.
Records could easily be kept, the same as for the additional assessments the different villages pay.
Since there are over 200 food vendors within 5 miles of Anthem center, residents have many choices to eat.
This is the first I have heard of a legal option to provide a restaurant.
It is true you need 50% of residents approval to repurpose an amenity space.
If the estimate of $500,000 cost to repurpose the space is accurate, and the estimate of $100,000 to $125,000 current cost for an empty space, we would recoup our expense in 4 to 5 years.
When I ran for the BOD, many residents voiced an opinion that they did not want to subsidize a for profit entity.
It seems like a very fair arrangement to come up with the finances needed to support the idea of a subsidized restaurant.
I personally believe that your idea should be explored and might possibly be the compromise that we've been looking for in order to bring some kind of harmony to the community.
"Pay for Play" would probably satisfy the supposed requirement that a restaurant be somehow required to fill the space.
Having a special dues assessment for those who choose to use the services of the restaurant that might be offset by a reduction in menu prices, while charging full cost for those choosing not to use it, would seem fair to all parties concerned.
Looks like you might have discovered "The Art of the Deal".
Seems Ms. Tobin is the breath of fresh air we need.
First constructive idea we've heard.
I hope Ms. Tobin continues to be the pebble in the shoes of all Board members and the GM until something gets done about this issue.
Some personal observations/questions:
1. Since when did the BOD concern themselves with strict compliance with the CC & R's or, for that matter, with NRS statutes (unless it, of course, favored their position)?
2. IF it would be financially feasible and/or benefit the residents of a community, HOW could it be "illegal" to change the CC & R's ?
3. WHO has made the decision that, in Ms. Tobin's words "...think we can all agree a restaurant is needed" ?
WRONG
4. Am I the only one to find it unacceptable that the GM was directed to that alternatives to the restaurant space be given to the Board by 12-31-2017, the deadline past, YET she was given a performance BONUS ?
5. WHY were there no transcripts or audio recordings made of the various meetings held when the fate of the restaurant was discussed ?
THIS is NOT transparency.
6. WHO and/or HOW was the figure of $4,000 per month developed regarding the "cost" of keeping the restaurant space vacant ? WHO and/or HOW was the figure of a subsidy cost of $14-$18/month per household (the cost of a restaurant subsidy) developed. Interviews with local Restaurateurs have NOT been conducted....so where did this figure materialize ?
7. There are APPROXIMATELY 7,000 households in SCA: so the subsidy estimate would reflect an annual expense of (rounded) $1,200,000 - $1,500,000......HOW WOULD THIS MAKE MORE SENSE THAN LEAVING THE SPACE VACANT FOR AN ANNUAL EXPENSE OF $48,000 ($4,000 X 12)
8. There is no logic in some of the statements in her treatise.
My guess is that you won't get any responses, but if you do, we certainly hope you will share them with Anthem Opinions...
...but it certainly would be refreshing as to their reactions to your questions.
At the very least, some kind of response(s) might show they were serious about the transparency they promised before they were elected.
First of all, the large percentage that Wanted a restaurant said ONLY IF SCA DID NOT SUBSIDIZE THE RESTAURANT.
TIME IS NOT OF THE ESENCE’ WHEREAS ‘FOOLS RUSH IN AGAIN’ AND MAKE QUICK DECISIONS, CAUSING ANOTHER FAILURE.
This IS written like an “attorney” and she needs to be careful in “playing the role” of an attorney and making her “interpretations” sound like the ONLY OPTION.
There are OPTIONS and many are plain stupid… a lease for $1 a year.
Gaming does generate BIG BUCKS and that’s why PT Tavern, Village Pub, and other businesses with Gaming can sell food so cheap.
I have been playing video poker when monies were pulled out of slot machines to be taken to the bank, all Twenty dollar bills and I mentioned the huge amount to the bartender (who said they do this several times a day).
WHO would benefit from the huge gaming profits…the restaurant owner and what would SCA get?
IF they have gaming, then SCA should should be responsible for NO COSTS AT ALL.
Restaurant rents space, decorates, furnished all equipment and furnishings, gaming cost, permit, licenses, whatever is required and then they won’t care whether they make money selling food…they will get money from SCA residents retirement income.
Many do not gamble as they do not drive, BUT you can bet your bippy the same folks will be occupying video poker seats regularly and some cannot afford i
t.
Makes me a bit ill to think of it but… in answer to your question…YES…
SHE APPEARS TO PUSHING EVERYONE TO MAKE A DECISION NOW AS ’TIME IS OF THE ESSENCE’ AND HER INTERPRETATION IS THAT DEL WEBB INTENDED FOR IT TO BE THERE FOREVER, OR THEY WOULD NOT HAVE REQUIRED A 75% VOTE TO CHANGE.
SHE HAS A GREAT BACKGROUND, DICK, BUT HER AGGRESSIVE STANCE IS A BIT SCARY.
CAN THE NEW BOARD BE INTIMIDATED BY HER, AS WELL AS THE GM?
The first thing that stood out was that Nona did not address the tax issue.
When the restaurant space is vacant, there is no requirement for the association to pay taxes, about $16,000/year as I remember. If/when a restaurant is in place, those taxes must then be paid.
I am convinced that once a subsidy is put in place, there will be no turning back. It is a slippery slope from which there is no return.
But if the board is intent on a restaurant, then hire the hot dog company that is at South Point.
This document is a regurgitation of all the rhetoric that has been spewed over all the years.
It says NOTHING, does not give direction, nor does it create an action plan.
Do the CC&R’s say we have a restaurant as an amenity?
Is it required?
Do they also say outsiders can frequent our amenity?
Does it say we should give away rent money and pay for an outside company to make a profit?
Does it say the restaurant should operate as a profit?
If this board member is quoting the CC&R’s, she better be pretty darn sure that we are following EVERYTHING in the documents for all areas of the running of SCA.
Nona is spouting off and trying to put the fear of God into the other less intelligent board members.
Sorry to say but this piece she has presented is full of NOTHING.